Newfield Exploration sold to Canadian firm in $5.5 billion deal

Another major energy purchase was announced this week and it involves a major player in Oklahoma’s STACK play—Newfield Exploration Inc.

The Houston-based company is being sold in a $5.5 billion purchase by Canada’s Encana Corp., a firm that had been trimming its oil and gas holdings in the past several years. But this purchase of the U.S. shale producer is Encana’s biggest-ever deal. And it means Encana will soon be involved in day-to-day operations in what together with the SCOOP are the biggest and most active oil and gas plays in Oklahoma.

The purchase will also give Encana entry to the Bakken region of North Dakota and the Uinta play in Utah. It’s an all-stock deal that will create North America’s second-largest shale explorer.

As part of the all-stock deal, Encana, based in Calgary, Canada will get greater access to the Anadarko basin as well as the Permian and Montney areas.

“This strategic combination advances our strategy and is immediately accretive to our five-year plan,” Chief Executive Officer Doug Suttles said in a statement.

EnCana said liquids production will contribute over half of the combined company’s production and help expand margins. Under the terms of the deal, Newfield shareholders will receive 2.6719 Encana common shares for each share of Newfield common stock.

Oklahoma Oil and Gas Association (OKOGA) President Chad Warmington issued the following statement on Encana Corporation’s planned acquisition of Newfield Exploration:

“Newfield’s contributions to the advancement and development of Oklahoma’s oil and gas industry cannot be overstated. Their commitment to the communities where they operate and their laser-like focus on operating safely and responsibly is why they are such a well-regarded company here in Oklahoma. This state owes a huge debt of gratitude to Newfield’s leadership and their entire team for believing in and investing heavily in Oklahoma and we look forward to welcoming Encana to the Oklahoma oil and natural gas family in the coming months.”

Shares of Newfield rose about 19 percent to $24.06 in pre-market trading. U.S. listed shares of Encana were trading slightly up at $10.30, having closed at $10.24 on Wednesday.

Since 2009, Encana had focused more reliance on gas after spinning off oil producer Cenovus Energy Inc.

Encana’s purchase was the second major announcement this week. Earlier, Oklahoma City’s Chesapeake Energy announced a $4 billion purchase of a Texas exploration company.